STEALING FUNDS?

Started by PattyB1 • 3 replies • 1225 views

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PattyB1 (Kentucky)
Posts: 40

Posted:

Hey everyone. I'm the newly elected President of our Board, and for the first time in a year, I saw the checkbook kept the previous Treasurer (another story). A good friend of the previous President and Treasurer has been getting paid by the other Board members for mowing our small medians. So what? Well,the homeowners only agreed to have someone mow, no one talked about a price. He received $100.00 for the last week in Apr.,$400.00(May)$400.00(June)$400.00(July). Then I found out the President was receiving at least half of that.Homeowners are not aware of this. The new Board takes over Sun. July 1st, and the new Secretary gave the "friend" a termination letter yesterday as we have someone to do it for free. We don't feel he has the right to keep the $400.00 for July, and The President was not to receive any money, as stated in our Bylaws.The last check written also does not say what it was for.We (the new Board) has asked for that $400.00 back, and I was told yesterday not to expect one penny of that money. As it was prepaid,not voted on,and not really sure why he got an extra $400.00, Can we get it back? I must tell you that several people were very upset with me for cutting off his funds. That money belongs to the HOA.Shouldn't all or a majority of homeowners have voted on what to spend on lawn mowing? By the way, it was the President and the Treasuer that signed all the checks,and the Treasurer says she can't turn over her bank statements, ect. yet untill she gets her records straight and makes copies.Patty

Jadedone4 (Virginia)
Posts: 495

Posted:

Patty, who has done the HOA's taxes for past years? That might be a good place to look for an "inexpensive" auditor, to review the books from old to new Treasurer. Also, since it is checking account, while it may cost funds, your bank should have previous statements, cancelled checks, etc - that you or the new Treasurer can match up to invoices or A/P accounts.

First order of business, is to REMOVE signature authority from previous officers, and then start the above process.

BradP (Kansas)
Posts: 2,640

Posted:

Patty:

I would do what the previous poster suggested. No, not all homeowner's vote on issues such as lawncare, that is a board decision that should have been discussed in an open meeting. There is a thread on board members where someone said he thinks boards should be able to cut through the "fat" to get the job done, this is what happens.

First lesson learned, never pay until services are completed, prepaying is not good business practice. Secondly, if there is proof that the president was getting the money I would puruse all avenues against him and get him to repay. You may want to get the advice of your association attorney so you aren't wasting your time and more HOA money pursuing him.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Patty, I have to agree with Brad. The entire HOA does not vote on such expenditures. That is what the board is for, to handle the day-to-day operation of the HOA, and lawncare is part of that. It would seriously hinder the board to have to get such approval on any and all things of that nature.

Having said that, since you were not a part of the board during the time that it "hired" the lawncare person, there is really not anything you can do about what they "agreed" to pay that person. That was during their administration and that is past.

But you DO have the right and the ability to terminate the agreement and re-bid and/or re-contract with someone else, IF there was no CONTRACT in place with the former lawncare person. If there was a legitimate contract in place, that stated a term, it should also give the requirements for termination. Most allow termination with a certain number of days notice. For lawncare our experience has been anywhere from NO notice required (just has to be in writing and specify and "as of" date) to a max of 30 days notice.

Even though you "pre-paid" for the service at $400 for this month, it may be in everyone's best interest to consider that a "severance" package in accordance with the termination. There is probably no way you can get that person "pay you back." Should he? Probably so. Will he? Probably not.

You need to evaluate which battles are the ones you NEED to fight, and getting that money back may not be one of them. Especially since you will probably need to file suit to do it and that would end up costing you way more than the $400 in the end.

I will say, however, that $100 a week for mowing is fairly reasonable for a signature entrance lawn maintenance. Of course, I don't really know how big or small your area is.

Regarding the president, while our governing documents do indeed say that board and officer positions are not paid positions, we DO make payments to our board members for reimbursement for out-of-pocket expenses. If the president can produce receipts and is not claiming the payments as salary, that may well have to be another fight that you step away from.

The most important thing now is to get the board back on track and get your financials in good working order.

Who is handling treasurer duties now? Any of the previous people? If not, what are your plans and what is your strategy for moving ahead with getting the financials and the day-to-day function back on track?

Best of luck to you. So excited that you are in a position to effect some long-needed change!

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